Earnings Season on the Stock Market

Earnings Season on the Stock Market

What is Earnings Season?

Four times a year, companies listed on the US stock exchange are required to report their financial results for the past quarter. Along with the reports, conferences are held where additional information may be shared—such as prospects, obstacles, changes, and plans. Various rating agencies conduct their own evaluations of companies, altering and publishing their ratings before and after earnings reports. Large investors and funds pay attention to these ratings when making decisions. This information is publicly available and, during earnings season, serves as the primary driver of the market.

How Does It Work?

An earnings report for Fastenal Company (FAST [NASD]) was released on 11-07-2018 before the market opened. The key figures exceeded expectations. The expected EPS was $0.45, but the actual result was $0.46. Expected revenue was $986 million, but the actual result was $1.04 billion. Before the report, the stock traded around $50, but the day after the report, the price was above $56. If trading the minimum lot of 100 shares, the profit could be over $500.

Chart of Fastenal Company, ticker FAST. Growth after the report. Example

When Does It Happen?

The unofficial start date of earnings season is considered to be the day when Alcoa Corporation (ticker AA [NYSE]) reports. In Q2 2018, the company reported on July 18. In Q3, the earnings report will be published on October 18.